According To The Bretton Woods Agreement The Task Of The Imf Would Be To

The IMF should provide loan advances to countries with balance-of-payments deficits. Short-term balance-of-payments difficulties would be overcome by IMF loans, which would facilitate exchange rate stability. This flexibility meant that a Member State did not have to cause depression to bring its national income down to such a low level that its imports would eventually fall within its capabilities. This should avoid the need for countries to resort to conventional medicine, to embark on dramatic unemployment in the face of chronic balance-of-payments deficits. Before the Second World War, European nations – especially Britain – often used it. The Fund cooperates, as part of this agreement, with all general international organizations and with international public organizations that have specialized missions in related areas. Any provision for such cooperation, which would involve a modification of a provision of this agreement, can only be made after amending this agreement, in accordance with Article XXVIII. There was broad consensus among powerful nations that the lack of exchange rate coordination during the interwar period had exacerbated political tensions. This facilitated the decisions of the Bretton Woods conference. In addition, all the Bretton Woods governments agreed that the monetary chaos of the interwar period had brought some valuable lessons.

730 delegates from the 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, USA, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. Delegates deliberated from July 1 to 22, 1944 and signed the Bretton Woods Agreement on the last day. Through the establishment of a system of rules, institutions and procedures for regulating the international monetary system, these agreements created the IMF and the International Bank for Reconstruction and Development (IBRD), now part of the World Bank Group. The United States, which controlled two-thirds of the world`s gold, insisted that the Bretton Woods system was based on both gold and the U.S. dollar. Soviet representatives attended the conference, but then refused to ratify the final agreements and claimed that the institutions they had created were „branches of Wall Street.“ [1] These organizations were commissioned in 1945 after the agreement was ratified by a sufficient number of countries. By 1968, the attempt to defend the dollar with a firm commitment of $35 per ounce, the policies of the Eisenhower, Kennedy and Johnson administrations had become increasingly untenable. Gold outflows from the United States accelerated and, although Germany and other nations promised to maintain gold, the Johnson administration`s unbalanced budget spending turned the dollar shortage of the 1940s and 1950s into a wave of dollars in the 1960s. In 1967, the IMF agreed in Rio de Janeiro to replace the department in tranches established in 1946. Special drawing rights (DSDs) were set at one dollar, but were not usable for transactions other than between banks and the IMF. Nations were required to accept SDRs up to three times their allocation and interest would be charged or credited to each nation on the basis of their participation in the SDR.